EMCO Ltd Directors Report.

To the Members of EMCO Limited

Report on the Standalone Financial Statements

We have audited the accompanying Standalone financial statements of EMCO Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2018, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information (hereinafter referred to as standalone financial statements).

Managements Responsibility for the Standalone Financial Statements

The Companys Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the standalone financial position, standalone financial performance, cash flows and changes in equity of the company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act, read with relevant rules issued thereunder.

This responsibility also includes maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of the appropriate accounting policies; making judgements and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and fair presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the standalone financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companys preparation of the standalone financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Companys Directors, as well as evaluating the overall presentation of the standalone financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Ind AS, of the standalone financial position of the Company as at 31st March, 2018, and its loss ( standalone financial performance) including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Material Uncertainty Related to Going Concern

As stated in Note no. 48 of the standalone financial statements, Company has incurred operational losses resulting into erosion of considerable net worth. As at the year end, Company has overdrawn credit facilities including interest of Rs. 50,255.37 Lakhs and other borrowings of Rs. 5,830.77 Lakhs that are due for repayment along with interest payable on such borrowings of Rs. 735.94 Lakhs. This factor indicates a material uncertainty, which may cast significant doubt about the Companys ability to continue as a going concern. However, Company has approached its lenders to restructure the debts, which along-with the sale of its non-core assets will result into improved liquidity and profitability as stated in the said note and therefore, the management is of the view that going concern accounting is appropriate. Our opinion is not modified in respect of the same.

Emphasis of Matter

Attention is invited to following notes of Standalone Financial Statements:

a) Note no. 9(a) of standalone financial statements in respect of the outstanding dues and liquidated damages / deduction made by customers aggregating to Rs. 12,109.75 Lakhs, which are carried as Trade Receivables. The company had filed legal case against the customers for the recovery of the same. Pending outcome of the matter which is presently unascertainable, no adjustments have been made in the statement.

b) Note no. 9(b) of standalone financial statements relating to uncertainties relating on recoverability of trade receivables Rs. 14,328.31 Lakhs, as at 31st March 2018, raised in the earlier years in respect of supplies or projects closed or substantially completed and where the claims are currently under negotiations and discussions with the customers. Pending the ultimate outcome of these matters, which is presently unascertainable, no adjustments have been made in the statement.

c) Note no. 49 of standalone financial statements relating to inventory of Rs. 2,491.62 Lakhs as at 31st March, 2018 which are lying unutilised for a considerable period of time. Management has carried out the technical evaluation and is of the opinion that these inventories are in good conditions and can be utilised in projects in future. We have not carried out physical verification of the materials lying at various project sites and have relied on the confirmations given by site in-charge.

d) Note no. 50 of standalone financial statements relating to revenues of Rs. 5,793.92 Lakhs recognised in earlier years under the percentage completion method which are yet to be billed as per the contractual terms and are considered as good of recovery as stated in the note.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order, 2016 (the Order), issued by the Central Government of India in terms of subsection (11) of section 143 of the Act, we give in the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by Section 143(3) of the Act, we report that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books.

c) The Balance Sheet, the Statement of Profit and Loss, the Cash Flow Statement and the Statement of Changes in Equity dealt with by this report are in agreement with the books of account.

d) In our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards specified under section 133 of the Act, read with relevant rules issued thereunder.

e) The matters described under the Material Uncertainty Related to Going Concern and Emphasis of Matter paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

f) On the basis of written representations received from the directors as on 31st March, 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2018, from being appointed as a director in terms of section 164(2) of the Act.

g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B" to this report.

h) With respect to the other matters to be included in the Auditors Report in accordance with Rules 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i) TheCompany has disclosedtheimpactofpendinglitigations onitsfinancialposition in its standalonefinancialstatements -Refer Note 44 to the standalone financial statements.

ii) The Company did not have any material foreseeable losses on long-term contracts including derivative contracts that require provision under any law or accounting standards for which there were any material foreseeable losses.

iii) There has been no delay in transferring amounts, which were required to be transferred to the Investor Education and Protection Fund by the Company.

For Chaturvedi & Shah
Chartered Accountants
Firm Registration No. 101720W
Sd/-
Amit Chaturvedi
Partner
Membership No. 103141
Mumbai, May 30, 2018

"Annexure A" to the Independent Auditors Report of even date on the Standalone Financial Statements of EMCO Limited

(Referred to in Paragraph 1, under Report on other legal and regulatory requirements" section of our report of even date.)

i) In respect of its fixed assets :

a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

b) As explained to us, all the fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

c) According to the information and explanations given to us and the title deeds / lease deeds and other records examined by us, we report that the title deeds / lease deeds in respect of all the immovable properties of lands which are freehold, immovable properties of land that have been taken on lease and disclosed as fixed assets in the standalone financial statement and buildings are held in the Companys name or in the Companys erstwhile name as at the balance sheet date except freehold land and buildings situated at Baroda and Rajkot having gross carrying value of Rs.21.02 lacs as at balance sheet date which are in the name of Urja Engineers Limited, the transferor company, which got amalgamated in to the Company.

ii) In respect of Inventories:

As explained to us, physical verification of the inventories have been conducted at reasonable intervals by the management, which in our opinion is reasonable, having regard to the size of the Company and nature of its inventories. No material discrepancies were noticed on such physical verification.

iii) The Company has granted unsecured loans to two wholly owned subsidiaries covered in the register maintained under Section 189 of the Act. The terms and conditions of the grant of such loans are not prejudicial to the interest of the company except in case of one subsidiary, company has given interest free loan. There is no schedule of repayment of principal and are repayable on demand. Also, there is no stipulation as to date of payment of interest. In view of this, question of overdue does not arise.

iv) In respect of loans, investments, guarantees and security given by the Company:

a) Company has not directly or indirectly advanced loan to the persons or given guarantees or securities in connection with the loan taken by persons covered under section 185 of the Act.

b) According to the information and explanations given to us, the activity of the Company falls under the definition of infrastructural facilities as defined under explanation to section 186 of the Act. Since section 186 of the Act is not applicable to such companies, the requirement of clause (iv)(b) of paragraph 3 of the Order is not applicable.

v) According to the information and explanations given to us, the Company has not accepted any deposits within the meaning of provisions of sections 73 to 76 or any other relevant provisions of the Act and the rules framed there under. Therefore, the clause (v) of paragraph 3 of the Order is not applicable to the Company.

vi) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014 prescribed by the Central Government under sub section (1) of Section 148 of the Act applicable in respect of certain activities undertaken by the company and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

vii) In respect of Statutory dues :

a) According to the records of the Company, there have been delays in depositing undisputed statutory dues of Tax Deducted at Source, Sales Tax, VAT, Service Tax, Goods and Services Tax, LBT, Excise Duty with appropriate authorities. According to the information and explanations given to us and on the basis of our examination of the books of account, the Company is generally regular in depositing undisputed statutory dues of income tax, custom duty, Provident Fund, ESIC and other material statutory dues during the year with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues, were outstanding as at 31st March, 2018 for a period of more than six months from the date they became payable.

b) According to the records of the Company and the information and explanations given to us, the disputed dues on account of income tax, sales tax, service tax, duty of customs, duty of excise, value added tax, cess that have not been deposited with appropriate authorities are as under:

Name of Statute Nature of Dues Amount (Rupees in Lakhs) Period to which the amount relates Forum where the dispute is pending
Sales Tax Act West Bengal VAT 87.74 2007-08 & 2009 -10 Joint Commissioner of Sales Tax, Behala Circle
Sales Tax Act Jharkhand VAT 195.61 2008-09 & 2010 -11 Deputy Commissioner of Commercial Tax , Jharkhand
Sales Tax Act Rajasthan VAT 703.11 2011-12 & 2012 -13 GHT>Rajasthan Tax Board, Ajmer.
Sales Tax Act Maharashtra VAT 172.73 2011-12 Joint Commissioner, Mumbai - IV
Sales Tax Act Uttar Pradesh VAT 230.58 2010 -11 & 2012 -13 Additional Commissioner of Commercial Tax, Lucknow
Name of Statute Nature of Dues Amount (Rupees in Lakhs) Period to which the amount relates Forum where the dispute is pending
Central Excise Act Penalty 6.98 2007-08 Customs. Excise and Service Tax Appellate. Mumbai
Central Excise Act Excise Duty 1.092.38 November 2001 to May 2015 Customs. Excise and Service Tax Appellate. Mumbai
Central Excise Act Penalty & Interest 170.99 2009-10 Customs. Excise and Service Tax Appellate. Mumbai
Central Excise Act Excise Duty 1.203.10 April 2009 to March 2017 Customs. Excise and Service Tax Appellate. Vadodra
Central Excise Act Excise Duty 77.16 April 2011 to March 2015 Commissioner (Appeals) . Central Excise and Customs . Mumbai
Central Excise Act Excise Duty 174.94 April 2010 - July 2015 Commissioner (Appeals) . Central Excise and Customs . Nasik
Central Excise Act Excise Duty 117.12 November 2015-June 2017 Commissioner (Appeals) . Central Excise and Customs . Vadodra
Central Excise Act Customs Duty 82.01 April 2014 Principal Commissioner of Customs . JNPT Navi Mumbai
Income Tax Act Income Tax 41.29 Ass. Yr. 2010-11 to 2014-15 Commissioner of Income Tax (Appeals). Thane
Income Tax Act Income Tax 0.42 2009-10 Income Tax Appellate Tribunal
Service Tax Service Tax and Penalty 88.57 Jan 2005 -June 2006 Commissioner (Appeals). Central Excise and Customs. Vadodra
Service Tax Service Tax .Interest and Penalty 84.02 Jan 2007- Oct 2010 Commissioner (Appeals). Central Excise. Mumbai Zone-I
Service Tax Service Tax .Interest and Penalty 17.01 October 2013 - February 2014 Customs Excise & Service Tax Appellate Tribunal
Service Tax Penalty 4.30 Aug 2006 to Mar 2010 Customs Excise & Service Tax Appellate Tribunal

viii) In our opinion and according to the information and explanations given to us, the Company has not delayed in repayment of loans to a financial institution or government or dues to debenture holders of the company. The Company has delayed in repayment of dues to banks during the year. The lender wise details are tabulated as under:

Name of the Lender Amount (Rupees in Lakhs) Delay in Days Remarks, if any
Andhra Bank 329.35 1 to 346 Term loan
Bank of India 241.64 1 to 334 Term loan
Dena Bank 2.408.70 1 to 365 Term loan
Union Bank of India 782.45 1 to 274 Term loan
Federal Bank 97.23 1 to 204 Term loan
Canara Bank 135.12 1 to 195 Term loan
Axis Bank 46.21 1 to 78 External Commercial Borrowing
Dena Bank 12.822.34 - Overdrawn Working Capital
State Bank of India 4.556.53 - Overdrawn Working Capital
Union Bank of India 15.295.21 - Overdrawn Working Capital
Andhra Bank 2.246.07 - Overdrawn Working Capital
Bank of India 3.631.17 - Overdrawn Working Capital
Canara Bank 303.18 - Overdrawn Working Capital
Kotak Mahindra Bank 261.67 - Overdrawn Working Capital
Federal Bank 1.867.51 - Overdrawn Working Capital

ix) The company did not raise any money by way of Initial public offer or further public offer (including debt instruments) and term loans during the year. Accordingly paragraph 3(ix) of the order is not applicable.

x) Based on the audit procedures performed for the purpose of reporting the true and fair view of the standalone financial statements and as per information and explanations given to us, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.

xi) Company has not paid any managerial remuneration during the year and hence clause (xi) of paragraph 3 of the Order is not applicable to the Company.

xii) in our opinion company is not a niani company. inererare, me provisions ot clause (xnj ot paragrapn 3 ot me uraer are not appncaDie to the company.

xiii) In our opinion and according to the information and explanations given to us, all transactions with related parties are in compliance with sections 177 and 188 of the Act and their details have been disclosed in the standalone financial statements, as required by the applicable accounting standards.

xiv) In our opinion and according to the information and explanations given to us, the Company has not made any preferential allotment or private placement or fully or partly convertible debentures during the year and hence clause (xiv) of paragraph 3 of the Order is not applicable to the company.

xv) In our opinion and according to the information and explanations given to us, the Company has not entered into any non-cash transaction with the directors or persons connected with him and covered under section 192 of the Act. Hence, clause (xv) of the paragraph 3 of the Order is not applicable to the Company.

xvi) To the best of our knowledge and as explained, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

For Chaturvedi & Shah
Chartered Accountants
Firm Registration No. 101720W
Sd/-
Amit Chaturvedi
Partner
Membership No. 103141
Mumbai, May 30, 2018

"Annexure B" to the Independent Auditors Report of even date on the Standalone Financial Statements of EMCO Limited

(Referred to in paragraph 2(g), under Report on other legal and regulatory requirements" section of our report of even date.)

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the Internal Financial Control over financial reporting of EMCO Limited ("the company") as of 31st March, 2018 in conjunction with our audit of the Standalone Financial Statements of the Company for the year then ended.

Management Responsibility for the Internal Financial Controls

The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of standalone financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the ICAI.

For Chaturvedi & Shah
Chartered Accountants
Firm Registration No. 101720W
Sd/-
Amit Chaturvedi
Partner
Membership No. 103141
Mumbai, May 30, 2018